Oil prices held steady below $ 60 yesterday as unseasonably mild weather dampened demand for heating oil and was expected to lead to a rise in US fuel stocks. US light crude oil climbed 13 cents to $ 59.60 a barrel by 0735 GMT after a tumble on Monday that took prices briefly to a new three-month low of $ 58.60 a barrel. London Brent crude was at $ 58.22, up 18 cents.

US demand for heating oil was expected to be about 42 percent below normal this week as temperatures remain mild in the US Northeast, the world?s largest oil consuming region, the US National Weather Service said on Monday.

?The market is focusing on weather, which is softening product demand everywhere in the Northern Hemisphere, not just the US Northeast,? said Naohiro Niimura, vice president at the derivatives unit at Mizuho Corporate Bank in Tokyo.

In Japan, the world?s third-largest oil consumer where demand for heating can soar in winter months, the weather was expected to remain normal or warmer than normal for the next two weeks. Expected rises in US oil inventories are also weighing on prices. Market sentiment has reversed after fears over product shortages in the wake of hurricane disruptions to US production helped drive prices to a record $ 70.85 in late August.

US inventories of distillates, including heating oil and diesel, are expected to have risen 600,000 barrels last week, the first gain in seven weeks because of sluggish demand, analysts said in a Reuters survey.

They said US government data due on Wednesday was also expected to show a 1.0 million barrel gain in gasoline inventories and a 1.4 million barrel build in crude stocks, amid heavy imports and higher refinery use.US crude production from the Gulf of Mexico region continued to recover slowly after hurricanes Katrina and Rita, though 51.54 percent of the region?s 1.5 million barrels per day capacity remains shut, the US government said on Monday.